Insurance products have long been built with a focus on mass application, constructed to ignore the subtle differences between individuals and families. It’s an approach to product design that has, naturally, not always suited each unique consumer.
James A. Burton, Executive Chairman and CEO at PPI, a national insurance marketing organization, is certainly not a fan of what he describes as this “lowest common denominator approach”.
“The reality is that, over the past 60 years, life insurance products have been limited in the way they’ve been designed,” Burton says.
Historically, most clients have bought life policies from two distinct categories: Term Insurance or Whole Life insurance. Term has represented a solid choice but, in many cases, becomes increasingly expensive so that when a consumer needs it the most, they can’t afford to keep the policy. Whole Life insurance has been a good long-term solution but it locks the buyer in, which, Burton says, does not fit with what today’s consumer expects.
“There is a real need for bespoke insurance solutions that start with the consumer, similar to a custom tailoring experience,” he says. “People have changed and life does not happen in a straight line anymore. People experience many changes that happen along the way, like health issues, economic loss, or divorce, and there is a need for a new version of product that adapts to the new way of life and does not lock clients in.”
In order to create products that fit the modern market, Burton says that the customer’s needs should be put front and centre. Policies need to be adaptable to life changes and customers should have the ability to make changes depending on their circumstances - without paying a penalty.
“Clients should be able to make changes when it suits them, not when it suits the insurance company,” Burton says. “People should be able to take out money whenever they choose. So, if they can’t afford to pay into the policy for the next few years, they can start over without penalty. The stop-and-go idea works well with the modern customer. In the past, it was too often all or nothing. If someone didn’t pay, they lost all their coverage.”
Burton sees a stark need - and opportunity - to build products that can shift, adjust, and evolve to the needs of the individual and their family at every stage of their lives. It’s something PPI has taken the lead on, with the introduction of a hybrid product in 2017.
“In many cases, the response to the new product has been emotional, because so many folks we spoke to have personal experience of seeing someone in their family being forced to cancel their policy because they couldn’t afford to pay it,” says Burton. “We are quite confident that the product we designed, and other products like this in the market, give customers the ability to design a product on their own; to create their own bespoke strategy.”